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Provincial Treasury Western Cape

NCOP Select Committee on FinancePublic Hearings

Conditional Grants and Capex

2 May 2006

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Outline• Conditional grant allocations

• Conditional grant transfers

• Monitoring transfers

• Expenditure

• Monitoring expenditure

• The way forward

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Conditional Grant Allocations

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CG Allocations

Budget allocation Rollovers

Adustments estimate

adjusted budget

Agriculture 19 706 2 732 22 438Provincial infrastructure 25 832 13 274 ( 13 350) 25 756Comprehensive agricultural support programme 17 206 2 058 19 264Land care programme grant: Poverty relief 2 500 674 3 174Drought relief 8 634 8 634Agriculture disaster management grant 18 000 18 000

Education 60 093 433 60 526Provincial infrastructure grant 55 229 14 336 13 350 82 915HIV and Aids (Life skills education) grant 11 198 7 11 205National school nutrition programme grant 40 135 426 8 760 49 321

Health 1 791 347 1 791 347Provincial infrastructure 55 229 55 229Comprehensive HIV and Aids grant 82 451 82 451Health professions training and development 323 278 323 278Hospital management and quality improvement 17 608 17 608Hospital revitalisation grant 172 038 ( 24 000) 148 038Integrated nutrition programme grant 5 288 5 288Forensic pathology services 14 583 14 583National tertiary services grant 1 214 684 1 214 684

Conditional grant allocations – 2005/06

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CG Allocations (2)Budget

allocation RolloversAdustments

estimateadjusted budget

Housing 9 373 96 874 106 247Integrated housing and human settlement dev 456 740 456 740Housing subsidy grant 76 509 76 509Human settlement and redevelopment grant 9 373 20 365 29 738

Tranport and public works 228 847 228 847Provincial infrastructure grant 92 557 3 300 95 857

Provincial and Local Government 24 500 24 500Disaster management grant 24 500 24 500Local government capacity building fund grant 10 560 10 560Prov project mngt capacity for MIG (old CMIP) 223 223

Social Development 4 265 028 4 265 028Food emergency relief grant 16 222 16 222HIV and Aids (Community-based care) grant 6 089 6 089Integrated Social Development Services Grant 20 034 20 034Social Assistance Administration Grant 236 234 236 234Social Assistance Transfers Grant 4 002 671 4 002 671One stop child justice centre 794 794

Sport and Recreation South Africa 2 670 2 670Mass sport and recreation participation prog 2 670 2 670

Total conditional grants 6 849 044 167 382 41 843 7 058 269

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Conditional Grant Transfers

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CG Transfers Reconciliation of Conditional Grant Payment Schedule

R'000 Total

National Allocation

Payment schedule Difference

Agriculture

Comprehensive Agricultural Support Programme Grant 17 206 17 206 -

Land Care Programme Grant: Poverty Relief and Infrastructure Development 2 500 2 500 -

Agricultural Disaster Management Grant 18 000 18 000 -

Education

Further Education and Training College Sector Recapitalisation Grant

HIV and Aids (Life Skills Education) Grant 11 198 11 198 -

National School Nutrition Programme Grant 48 895 48 895 -

Provincial and local government

Disaster Relief Grant 24 500 24 500 -

Health

Comprehensive HIV and Aids Grant 82 451 82 451 -

Health Professions Training and Development Grant 323 278 323 278 -

Hospital Management and Quality Improvement Grant 17 608 17 608 -

Hospital Revitalisation Grant 148 038 148 038 -

Integrated Nutrition Programme Grant 5 288 5 288 -

National Tertiary Services Grant 1 214 684 1 214 684 -

Forensic Pathology Services Grant 14 583 14 583 -

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CG Transfers (2)

R'000 Total

National Allocation

Payment schedule Difference

Local government and housing

Integrated Housing and Human Settlement Development Grant 456 740 456 740 -

Human Settlement and Redevelopment Grant 9 373 9 373 -

National Treasury

Provincial Infrastructure Grant 228 847 228 847 -

Social development

HIV and Aids (Community-Based Care) Grant 6 089 6 089 -

Integrated Social Development Services Grant 20 034 20 034 -

Social Assistance Administration Grant 236 234 236 234 -

Social Assistance Transfers Grant 4 002 671 4 002 671 -

Sport and Recreation South Africa

Mass Sport and Recreation Participation Programme Grant 2 670 2 670 -

Total 6 890 887 6 890 887 -

Reconciliation of Conditional Grant Payment Schedule

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Monitoring Transfers

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Monitoring transfers• The Western Cape experienced some problems with the

late transfer of Conditional Grant payments in 2005/06• As there is no formalised process for monitoring these

transfers, cash management only becomes aware of the intention to withhold transfer on day transfer expected as per payment schedule

• PT recommended a more formalised process to NT to ensure PT alerted of a national departments intention to withhold funds timeously, this recommendation was subsequently taken up in Practice Note 3 of 2005

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Monitoring transfers (2)• This process requires National Departments to, when giving a

receiving officer notice of its intention to withhold funds, send a copy of the notice to National Treasury, who will inform Provincial Treasury of the intended delay

• National Departments are still failing to comply with DORA 2005 and Practice Note 3 requirements

• Provincial Treasury subsequently proposed that National Treasury – ensure that transferring departments are aware of conditions placed on them in

terms of DORA and Practice Note 3 of 2005;– Explore ways to ensure that transferring departments adhere to the payment

schedule and take necessary precautions to ensure that provinces receive funds timeously

• This recommendation has subsequently been taken up in DORA 2006

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Expenditure

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CG Expenditure - Agriculture

Agriculture – CG Expenditure as at 31 March 2006

R'000Total

available Spent by Province

Spent as % Budget Deviation

Provincial infrastructure 25 756 28 885 112.1% ( 3 129)

Land care 3 174 3 275 103.2% ( 101)

Comprehensive Agriculture Support Programme 19 264 19 385 100.6% ( 121)

Agriculture disaster management 26 634 16 435 61.7% 10 199

Total 74 828 67 980 90.8% 6 848

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CG Expenditure – Agriculture (2)

• Challenges to overcome– Agriculture disaster management grant

• Invoices received late from claimants

• Transfers allocated in adjustments estimate

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CG Expenditure - Education

Education – CG Expenditure as at 31 March 2006Total

available Spent by Province

Spent as % Budget Deviation

Provincial infrastructure 82 565 81 634 98.9% 931

HIV and Aids (Life Skills Education) 11 205 11 443 102.1% ( 238)

National School Nutrition Programme 49 321 49 318 100.0% 3

Total 143 091 142 395 99.5% 696

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CG Expenditure - Health

Health – CG Expenditure as at 31 March 2006

Comprehensive HIV and Aids – R10 million over expenditure to be funded through equitable share funds

Total available

Spent by Province

Spent as % Budget Deviation

Provincial infrastructure (PIG) 55 229 53 891 97.6% 1 338

Comprehensive HIV and AIDS 82 451 92 649 112.4% ( 10 198)

Health professions training and development 323 278 323 278 100.0% -

Hospital management and quality improvement 17 608 17 937 101.9% ( 329)

Hospital revitalisation 148 038 99 357 67.1% 48 681

Integrated nutrition programme 5 288 5 078 96.0% 210

National Tertiary services 1 214 684 1 214 684 100.0% -

Forensic pathology services 14 583 4 392 30.1% 10 191

Total 1 861 159 1 811 266 97.3% 49 893

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CG Expenditure – Health (2)

• Challenges to overcome

– Hospital revitalisation programme:• Slow performance of contractors on various projects• Worcester Hospital – a shopping centre is being built in the

same area resulting in competing for resources which results in delay in construction

• Paarl hospital – Delay in the approval of the business plan• The Department proposed the purchase of two linear

accelerators for Tygerberg Hospital to offset the under expenditure but as no business plan had been approved this was not possible

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CG Expenditure - Health (3)

– Forensic pathology services• Voted in the 2005/06 adjustments estimate• First tranch received in December• Close to R5 million transferred to the Department of Transport

and Public Works for the purchase of motor vehicles• Expenditure of the remaining funds is dependent on approval

by the National Department of Public Works, the National Department of Health and SAPS.

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CG Expenditure – Local Government and

Housing

Local Government and Housing – CG Expenditure as at 31 March 2006Total

available Spent by Province

Spent as % Budget Deviation

Integrated housing and human settlement development 533 249 533 249 100.0% -

Human settlement and redevelopment 29 738 18 601 62.5% 11 137

Disaster relief 24 500 17 911 73.1% 6 589

Total 587 487 569 761 97.0% 17 726

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CG Expenditure – Local Government and

Housing (2) • Challenges to overcome

– Human settlement and redevelopment grant• Late approval of projects by the National

Department of Housing

• Payments made on actual delivery

– Disaster relief• Projected life is 2005/06 as well as 2006/07

• Payment made on certified claims only

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CG Expenditure – Social Development

Social Development: CG Expenditure as at 31 March 2006Total

available Spent by Province

Spent as % Budget Deviation

Social assistance transfers 4 002 671 3 943 583 98.5% 59 088

Social assistance administration 236 234 236 680 100.2% ( 446)

Integrated social development services 20 034 20 034 100.0% -

HIV and Aids (Community Based Care) 6 089 6 089 100.0% -

Total 4 265 028 4 206 386 98.6% 58 642

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CG Expenditure – Social Development (2)

• Challenges to overcome

– Social Assistance Grants• Slower take up of grants than expected

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CG Expenditure – Transport and Public Works

Transport and Public Works: CG Expenditure as at 31 March 2006Total

available Spent by Province

Spent as % Budget Deviation

Provincial infrastructure grant 96 207 91 476 95.1% 4 731

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• Challenges to overcome– Provincial infrastructure grant

• R3,3 million received in adjustments estimate for FET Centre in Oudtshoorn and Elsenburg lecture rooms

CG Expenditure – Transport and Public Works

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CG expenditure – Cultural Affairs and Sport

Total available

Spent by Province

Spent as % Budget Deviation

Mass sport and recreation participation 2 670 2 667 99.9% 3

Cultural affairs and sport: CG Expenditure as at 31 March 2006

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Capital Expenditure

Capital expenditure as at 31 March 2006Total

available Spent by Province

Spent as % Budget Deviation

Payment for capital assets 1 541 818 1 479 235 95.9% 62 583

Approximately R49 million of the underspending is attributed to Hospital Revitalisation Grant

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Infrastructure Expenditure

Preliminary infrastructure expenditure as at 31 March 2006 Total

available Spent by Province

Spent as % Budget Deviation

Education 373 808 362 645 97.0% 11 163

Health 273 725 216 456 79.1% 57 269

Agriculture 48 194 51 545 107.0% ( 3 351)

Public w orks 121 110 119 741 98.9% 1 369

Roads 895 482 899 820 100.5% ( 4 338)

Public transport 111 025 109 616 98.7% 1 409

Total 1 823 344 1 759 823 96.5% 63 521

Underspending at health relates directly to Hospital Revitalisation Grant

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Infrastructure Expenditure (2)

• Challenges to overcome– Bottlenecks in the procurement process– Inefficiencies in the link between planning,

budgeting and implementation– Capacity constraints

• Measures instituted– Education front loading– Promotion of earlier planning cycle (IDIP)

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Monitoring Expenditure

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Monitoring Provincial Expenditure

• Monthly reports to NT• Quarterly reports to Top Management, Exco and

Legislature (SCOF)• Quarterly narrative reports to AOs and CFOs• Frequent interaction with departments on spending

performance and general issues• Quarterly meetings between MEC’s for finance, education,

health and public works to discuss infrastructure spending and other difficulties

• Continuous engagements with departments in a co-operative manner to jointly seek solutions

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The Way Forward

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The way forward• Build on financial and non-financial quarterly reports to

Legislature, Exco and Top Management: to better inform engagement with departments

• Paradigm shifts – for alignment of infrastructure cycle with the budget cycle

• Legislation needs to be more enabling – conditions result in delay in service delivery

• There needs to be certainty regarding funding levels and the flow of funding, this is especially relevant for infrastructure spending

• Ensure the early sign off of business plans• Care should be taken to ensure that conditions placed on

conditional grants do not impact on service delivery

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Discussion